Senator Elizabeth Warren proposes a new bill that aims to prevent Russia from evading sanctions with cryptocurrencies.
On Thursday (March 17, 2022), Russia’s largest bank Sberbank announced that it will soon begin issuing digital financial assets (DFA). Companies will then be able to conduct transactions on the bank’s blockchain platform.
In 2020, Sberbank is working on SberCoin (presumably a stablecoin) in partnership with JPMorgan. Sberbank has been waiting to be licensed to operate digital asset-related services for a long time, but the Central Bank’s bitter stance and circumstances never forced the Bank to issue a license for Sberbank.
Now, however, the Central Bank of Russia appears to have changed its stance on cryptocurrencies with its latest decision to grant Sberbank a crypto license.
This seems to be a new direction to help Russia improve its economy, which is heavily affected by international sanctions. According to the announcement of Sberbank, companies can issue their own DFA to attract investment in the market. This not only benefits those who have idle money, afraid of devaluation but also helps companies raise capital to operate in difficult economic times like today.
Sergey Popov, Executive Director of Sales at Sberbank said:
“We are just starting to work on digital assets but see huge growth potential. In particular, the current regulatory framework and the current situation of Russia both create favorable conditions for this asset to develop further.”
Before the move of Sberbank. Also on March 17, U.S. Senator Elizabeth Warren proposed a new bill that would strengthen and expand countries, organizations, and individuals that use cryptocurrencies to evade sanctions. She also said:
“We can’t allow Putin & his cronies to hide their wealth & evade economic sanctions using cryptocurrency.”
Senator Jon Tester also stated on one of his twitter that:
“Our sanctions against Russia are working, and we should close any potential loopholes to make sure they keep working.”
According to the plan, this bill will be submitted to US Treasury Secretary Janet Yellen for consideration and evaluation before being approved by President Biden. In particular, the content of the draft law has three notable points, which are:
- There is the possibility of enacting secondary sanctions, preventing all Russian people and domestic organizations from evading sanctions through cryptocurrencies.
- Prevent users from trading at exchanges in the US, with addresses or e-wallets from Russia.
- US residents must notify FinCEN (the US Treasury Department’s financial crime agency) if they make a transaction with an offshore account valued at $10,000 or more. This helps FinCEN determine whether the owner of the e-wallet is Russian or not.
During this time, there were also suggestions that Russia would use cryptocurrency to fight sanctions.
This seems likely to be the case, as, given the severe tension between Ukraine and Russia, the license for Sberbank shows that the Central Bank of Russia is currently advocating the adoption of cryptocurrencies. However, it is still too early to comment on such speculations as there has been no official statement from the Central Bank on the matter.